1. saving & investing WHAT’S THE DIFFERENCE? WHICH ONE WILL EARN ME MORE MONEY?

2. LEARNING TARGETS Students will: Define different saving options and concepts Calculate simple and compound interest Understand the difference between saving and investing Read a stock listing. Calculate capital gain/loss. Describe the different types of stocks. Contrast the 2 types of brokers. Explain the role of the SEC. Put together an investment portfolio.

3. Investing When you choose to save in a way that earns income.

4. Why invest?  Retirement  College  Travel plans  Extra income

5. Corporate Stocks A unit of ownership in a corp.

6. Stockholders Investors in a corporation. You need to buy only one share to be a stockholder.

7. RISK AND RATE OF RETURN LT #3 – Discuss how risk affects capital gain/loss Risk = The chance that an investment will decrease in value. ↑ Risk = ↑ chance for a return.

8. Return The income you earn on an investment.

9. Why do companies sell stock?

10. Who can help? LT #6 – Contrast the 2 types of brokers Full Service Brokers = give investment advice for a fee. EX: Merrill Lynch, Fidelity, American Express. Discount Broker = for a discounted fee, will buy/sell securities (stock). EX: Charles Schwab, Ameritrade, E*Trade.

11. Annual Reports A summary of a corporation’s finances and general business info.

12. Diversification Choosing several types of investments (stocks, bonds, real estate) instead of one. ↓ risk.

13. Have you heard the phrase “Don’t put all your eggs in one basket?”

14. vs.

15. Investment Options LT #5 – Explain the different investment options Bonds Stocks Mutual funds Real estate

16. How do you earn a return on your investment? LT #2 – Calculate capital gain/loss Dividend = A share of a company’s profits. Capital Gain = The profit you earn from selling stock at a higher price than you paid for it. Capital Loss = The amount you lose.

17. I wonder how long it would take me to double my money?

18. Rule of 72 This mathematical technique allows you to estimate the # of years it will take you to double your money. Example: You are earning a 10% return per year on your money. How long will it take to double your money? Answer: 72 divided by 10 = 7.2 years

19. List 5 companies you might want to invest in.

21. TYPES OF STOCK LT # 4 – Describe the different types of stock Preferred Stock = Gives you no voting rights, but pays a fixed dividend. Common Stock = Gives you voting rights, & dividends are determined year to year.

22. Blue Chip Stock Shares in large, well- established companies. EX: Coke, Ford, IBM, Disney (Appear on the Dow Jones)

23. Growth Stock Young corp. expected to experience rapid growth.

24. Penny Stocks Sold for small companies that have no track record.

25. Why invest in growth stocks?? Why Not?

26. What we’ve learned What it means to invest. Investment options. Types of stock. Who can help us buy/sell stock. Why companies sell stock. How you make money on investments.

27. Where can you buy stock? STOCK EXCHANGE = A location where stocks are bought and sold.

28. NYSE New York Stock Exchange

29. NYSE FACTS  First organized May 17, 1792.  24 brokers/merchants sign the Buttonwood Agreement, agreeing to trade stocks with one another.  This took place on Wall St. in Manhattan under a buttonwood tree.  Five securities traded: 3 gov’t. bonds and 2 bank stocks.

30. NYSE FACTS CON’T.  1844 – invention of the telegraph broadened the exchanges ability to communicate with brokers outside New York City.  Bank of New York – first company listed with exchange.  Highest volume day: 5,799,792,281 shares on August 16, 2007.  Lowest volume day: 31 shares on March 16, 1830.

31. NASDAQ  National Association of Securities Dealers Automated Quotation System  The most common way to trade stocks.

32. NASDAQ FACTS  Has no physical trading floor, all trades done electronically.  1.8 Billion trades per day. The largest volume of any other exchange.  Known for its high-tech, new and high growth companies. 3,300 companies are on its listing.  Is a publicly owned company. You can buy its stock.  Ticker symbol is NDAQ.

33. LT #1 – Read a stock listing See Figure 12-5: Reading The Stock Listing pg. 294

34. Ticker Symbol Each stock has a company abbreviation. Target = TGT.

35. How’s it going?  Bull Market = A period of rising stock prices.  Bear Market = A period of falling stock prices.

36. MUTUAL FUNDS LT #5 – Explain the different types of investment options A group of investments owned by many investors who pool their money together & buy a variety of stocks. What do we call this?

37. COST OF MUTUAL FUNDS Loads = a sales fee you pay a broker when investing.

38. Types of Loads  Front-end Load = You pay this sales fee when you buy your shares.  Back-end Load = You pay this sales fee when you sell your shares.

39. Corporate Bonds LT #5 – Explain the different types of investment options Corp. raise money by selling bonds. Less risky than stocks.

40. *When you buy a bond you are lending a corp. money. In return they promise to pay back that money plus interest by a certain date.

41. INVESTMENT SCHEMES LT #7 – Explain the role of the SEC  SEC = Securities and Exchange Commission  Responsible for enforcing laws concerning the trading of stock/bonds. They investigate dishonest deals.

42. Insider Trading Trading stocks based on information not available to the public.

44. Web sites:  www.nyse.com New York Stock Exchange  www.wsj.com Wall Street Journal  www.marketguide.com  www.teenvestor.com Teenvestor  www.fool.com The Motley Fool